DCC expects double-digit growth
In September, DCC warned trading in IT distribution had worsened and this, combined with the first-time impact of seasonally loss-making Shell Direct UK fuels supplier, meant adjusted earnings per share would fall by around 10% in the first half.
The cost of the insider dealing case taken by fruit importers Fyffes against its former shareholder DCC could top €20 million, making it one of the most expensive cases in the history of the State.
Figures revealed by Fyffes in September show it spent €4.3m on legal fees in the civil action between January and June of this year. In 2004, the company’s legal costs came to €4.1m.
DCC’s cost over the same period came to close to €4.187m over the same period figures released by DCC yesterday reveal.
DCC chief executive Jim Flavin said that most divisions, especially energy, had performed better than had been anticipated in the final month of the period, and this had limited the first-half fall in earnings to 4.4%.
“Generally across the board things were just a little better than we’d expected,” he told Reuters.
DCC makes about two-thirds of its profit in the second half of the year and Flavin said he expected earnings growth of just above 10% in the final half of its year.
“Our board’s expectation is that we should achieve double-digit growth in the ... second half of the year,” he said.
“It’s very early and we would be indicating at this stage no more than just into double digits,” he added.
Davy Stockbrokers’ analyst Florence O’Donoghue said: “The results underline the resilience of the DCC operating model. The stock, however, is under 11 times current year forecast earnings and has fallen almost 22% since the trading statement on September 12.”
O’Donoghue, who has a 20 target price on the shares, said the positive tone of the interim results statement, coupled with the stock’s rating, suggested it has been oversold and was due a rebound.
DCC said earnings per share, excluding exceptional items and amortisation of intangible assets, dropped 4.4% in the six months to the end of September to 45.34 cents from 47.43 cents in the same period last year.
The mid-range forecast from five analysts surveyed by Reuters was for an 11.3% fall to 41.7 cents.
Group profit before exceptional items and tax dropped 3.0% to €41.1m.
Profit at DCC’s IT and entertainment division, which contributed 21% of group profit in 2004, fell 37% to 7.6m after retail consumer spending declined sharply in July and August.
But its healthcare, and food and beverage businesses rose 48% to €10.1 million and 38% to €7.4 million respectively.
The group raised its interim dividend by 15% to 15.54 cents a share.
Additional reporting Reuters.
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